NO LONGER A PARIAH IN TRADE WORLD

Tom Hundley, Tribune Foreign CorrespondentCHICAGO TRIBUNE

One day last week, as British prosecutors in a Dutch courtroom were laying out their case against two Libyan agents accused of blowing up Pam Am Flight 103 nearly 12 years ago, British businessmen were laying out their wares at a trade fair in Tripoli, the Libyan capital.

That evening, one of Britain's top soccer teams, Middlesbrough, took on Libya's national team, the first match the two countries had in nearly 16 years. The occasion was the inauguration of a new soccer stadium in Tripoli; the Libyans won 1-0.

It was Libya's quixotic leader, Col. Moammar Gadhafi, who made the trial, trade fair and soccer game possible. Whether he also turns out to have been the initiator behind the Lockerbie bombing will have to await the determination of the court.

When Gadhafi agreed to surrender the two Lockerbie suspects 13 months ago, the United Nations suspended the sanctions against Libya and European businessmen began beating a path to the Libyan leader's desert tent. After a decade of wandering in the political and economic wilderness, Libya is suddenly back on the map.

Within 24 hours of the UN action, Italian Foreign Minister Lamberto Dini was in Tripoli, paving the way for Italy to restart trade with its wayward former colony.

A few weeks later, Alitalia resumed flights to Tripoli, the first European airline to fly into the capital in nearly a decade. The Italian carrier was followed in swift succession by British Airways, Swiss Air, Austrian Airlines and Lufthansa, the German airline.

These days, those flights are packed. Not with tourists seeking a spot on Libya's 1,200 miles of mostly pristine Mediterranean coast, but with businessmen prospecting for deals. Thanks to Dini, Italian companies grabbed the early lead, but Germany and Britain are reported to be gaining fast.

It is not clear what caused Gadhafi's change of heart. Some analysts have theorized that economic necessity and internal political pressure finally convinced the Libyan leader that he had to find a way to end the sanctions.

Others suggest that Gadhafi, with his fondness for the limelight, had grown weary of isolation.

Still others see signs of a "new" Gadhafi--older, wiser, more realistic.

"Right now, he's on probation," said a senior European official. "He knows it and knows he's got a lot to lose if we see any evidence of backsliding. But so far, it's been encouraging."

Diplomats in Tripoli say there have been no terror acts linked to Libya in the last five years.

At last month's European Union-Africa summit in Cairo, however, it was the old Gadhafi who camped on the grounds of a luxury hotel in a Bedouin tent and lambasted European leaders for their "colonial attitudes" toward Africa.

But this did not stop the likes of French President Jacques Chirac, German Chancellor Gerhard Schroeder and Spanish Prime Minister Jose Maria Aznar from lining up for an audience with Gadhafi.

Among the major powers, only the U.S. has been reluctant to patch things up with the leader the Reagan administration once demonized as "The Most Dangerous Man in the World."

U.S. sanctions, separate from those of the UN, remain in place.

American companies are still barred from doing business in Libya and American citizens, with the exception of journalists, are not allowed to visit.

This March, however, the U.S. State Department sent a team to Tripoli to determine whether it was safe enough to permit Americans to return. Although Libya is probably one of the safest places on Earth for foreigners to visit or live, it will probably remain off-limits to Americans at least until there is a verdict in the Lockerbie case.

State Department officials say there are political concerns that if the U.S. moves too fast in lifting sanctions, the Lockerbie families will lose leverage in their demand for compensation from Libya. The families have a powerful ally in Sen. Edward Kennedy (D-Mass.), who last month urged the Senate to pass a resolution asking the State Department not to lift the travel ban.

But despite America's official standoffishness, there is a growing sense among Libyans and foreign diplomats in Libya that the U.S. return is only a matter of time.

After the UN sanctions were lifted last year, Libya paid compensation to the family of a British police officer who was killed by gunfire from the Libyan Embassy in London in 1984. In response, Britain returned its ambassador to Libya last December after a 15-year hiatus. Similarly, the Libyans gave France $31 million for the families of those killed in the 1989 bombing of a French UTA airliner over Niger.

In an interview with the Tribune last week, Gadhafi asserted Libya's innocence in the Lockerbie case, but said he would leave it to the courts to determine who, if anyone, was liable for financial damages to the 270 people killed in the attack.

While the Libyan leader made clear that he wants to put Lockerbie behind him and renew normal relations with the U.S., he said the "ball was in America's court," and that it was up to the U.S. to "mend fences."

That, too, was the message of Bashir Zenbil, a precise man with a degree in statistics from the University of Michigan. As director of the Libyan Foreign Investment Board, he has had a full appointment book since UN sanctions were lifted a year ago.

"Everybody in Libya wants to have good relations with the United States, but we are not going to beg," Zenbil said.

"We know the Americans have the best technology. American companies have a lot of experience in Libya. But time is important. Every week we see hundreds of Europeans and Asians coming in here. If the Americans choose to wait, let them wait--and someone else will take your place," he said.

Libya is emerging from a decade of sanctions and political isolation in better shape than anyone might have expected.

Tripoli looks a bit threadbare and patched together. It may lack the familiar symbols of the international urban landscape--McDonald's golden arches and splashy Marlboro billboards--but it does not have the mean and sullen air of a Baghdad, Iraq, or Belgrade, Yugoslavia.

The atmosphere is relaxed, sidewalk markets are jammed with goods and the street scene is a kaleidoscope of Arab and African faces. Many immigrants from sub-Saharan Africa have been drawn here by an economy that is actually prosperous in comparison to their own.

Unlike Iraq's Saddam Hussein, Gadhafi did not build gold-plated palaces for himself while starving his nation's children to score political points at the UN. Unlike Yugoslavia's Slobodan Milosevic, he did not hand his economy over to a state-sanctioned mafia.

Instead, Gadhafi lived in a tent--at least for periods of time--while Libyans tightened their belts and became remarkably self-sufficient.

A black market inevitably sprouted as imported consumer goods became scarce and expensive, but so too did "purification committees"--ad hoc citizens groups which made sure no one grew too rich off the black market, or at least made no ostentatious display of ill-gotten wealth.

The trauma of the 1986 U.S. airstrikes on Tripoli and other Libyan sites still lingers for many people here, and most seem to feel that the sanctions that followed the Lockerbie bombing were an unfair form of collective punishment for a crime their government may or may not have committed.

The ban on international air travel was more than just an inconvenience for ordinary Libyans. It was psychological reinforcement of the notion that all Libyans were somehow dangerous criminals.

But despite these indignities, there appears to be little animosity toward Americans.

"Speaking for myself, I want to see the Americans back. Everybody wants the American technology," said Jalal Khalifa, a 24-year-old engineering student who was at the British Trade Fair.

His friend, Adil Alioa, 28, a petroleum engineer, agreed: "If the Americans come back, we can really say we are a normal country."

The two seemed to speak for many of their generation, a generation that has only known Libya's status as an international outcast.

Gadhafi, who has monopolized political power in this North African country since toppling the monarchy in a 1969 coup, still appears to enjoy widespread support, though perhaps not as much as a decade ago.

"I wouldn't say he has the massive popular support he once had, but that's mainly because people do not yet have the economic freedoms they've been promised," a Western diplomat in Tripoli said.

"Gadhafi is hardly the monster you people have made him out to be. If things were so bad here, you would see boatloads of people asking for asylum in Italy, and you don't see that at all," he said.

It is not clear why Gadhafi, after stubbornly refusing to cooperate in the Lockerbie case for the better part of a decade, has suddenly changed course and exposed his regime to the risk of a trial.

One suggestion is that after a rough patch in the 1990s, when both the army and religious fundamentalists challenged his regime, Gadhafi finally has the domestic political situation under control and is able to take steps to repair the economy.

But diplomats in Tripoli tend to discount that theory, saying that the internal threats to the regime were not all that serious. They see the overtures to the West as a genuine attempt at reconciliation based on national self-interest.

"Give the devil his due. With maturity comes wisdom," said another Westerner. "He's a very proud man with a strong personality and a keen awareness of the history of colonialism. What you are seeing now is the evolution of a human being who recognizes the changes in the world."

While making no apologies for the past, Gadhafi agreed that the world had changed and that he had changed with it.

"I fully realize and understand the changes in the technology of information and communication that are taking place around the world."

He added that he hoped the United States "fully understands these changes" as well.

Libya pumps 1.3 million barrels of oil per day. It is not a poor country.

During Gadhafi's 31 years in power, it has spent about $200 billion on infrastructure--highways, schools, hospitals and housing. But nearly 70 percent of its 5.5 million people are under age 20, and even with a bloated public sector, unemployment is estimated at between 30 and 40 percent. With tens of thousands of young people coming onto the job market each year, pressure on the regime to liberalize the economy and open it to foreign investment is sharpening.

Italian construction companies, British aerospace and biotech firms, German health-care outfits and pharmaceutical manufacturers have all been knocking on foreign investment czar Zenbil's door.

ENI, Italy's largest gas and oil company, recently signed a $5.5 billion deal that includes a pipeline from Libya to Sicily.

Airbus Industrie, Boeing's European rival, just announced that Libyan Airlines, which needs to replace its entire fleet, agreed to buy 24 of its wide-body jets.

In all, the Libyan government plans to invest $35 billion over the next five years.

"This is great for us," said Irene Dallas, a British lawyer from Reading Berkshire who was manning her firm's booth at the trade fair. "For once, we've got in before you guys," she told an American visitor.

Meanwhile, in a distant courtroom on a former U.S. bomber base in the Netherlands, the Lockerbie case grinds on. The prosecution has said it will call more than a thousand witnesses. A verdict is not expected for at least a year.

If the trial turns out badly for the Libyans, it could implicate Gadhafi and bring an abrupt end to his hopes for rehabilitation.

Nonetheless, he was ready to take the gamble to free himself and his country from the isolation of the last dozen years.

GADHAFI'S LIBYA

1989

Col. Moammar Gadhafi and a group of army officers seize power of Libya. Gadhafi announces that agreements covering British and American bases in Libya will not be renewed.

1972

After Gadhafi delivers a vigorous speech against Britain and the U.S., America withdraws its ambassador from Libya.

1979

The U.S. Embassy in Tripoli is stormed and burned. The U.S. declares Libya a "state sponsor of terrorism."

1980

The U.S. closes the Libyan Embassy in Washington.

1982

The State Department suspends travel to Libya. The U.S. prohibits imports of Libyan oil and expands controls on goods intended for export to Libya.

1986

The U.S. imposes economic sanctions and freezes all Libyan assets in the U.S.

The U.S. accuses Gadhafi of ordering the bombing of a West Berlin discotheque, which killed three, including an American serviceman. In response, the U.S. bombs Tripoli and Benghazi.

1988

Two Libyan agents allegedly plant an explosive on Pan American Flight 103, which later explodes over Lockerbie, Scotland, killing 270.

1989

Libya is linked to the bombing of UTA Flight 772 over Niger, in which 171 died.

1992

The UN imposes sanctions for Libyas failure to extradite two agents linked to the Pan Am bombing and four linked to the UTA bombing.

1993

The UN tightens sanctions.

1999

Libya hands over two suspects accused in the bombing of Pan Am Flight 103 for trial. UN embargo ends, although U.S. sanctions remain. Britain, France, Italy and Germany re-establish relations with Libya.

2000

The State Department sends a team to Tripoli to determine if it is safe for Americans to return.